ClickZ: CPG Companies Crank Up Display Ad Spend

Quick note on the ClickZ article last week about CPG companies ramping up online spend.  Branding is tremendously important in this category, which includes many of the largest advertising spenders on the planet (P&G, Unilever, etc.).  Companies like these are increasingly realizing that their customers are consuming a greater and greater share of their media online, so if they want to protect their brands they need have their ad budgets track that shift in behavior.  The alternative is to risk losing share to new brands or – particularly as wallets tighten through the recession – private label products.  Research indicates that such share losses can be permanent, so continued investment is critical even in “this economy”.  Glad to see them staying sharp.

P&G’s “Passion for Digital”

P&G is the largest marketer in the world.They are also one of the most successful. This recent article in Ad Age gives us some insights into why.

The article quotes Marc Pritchard, P&G’s global CMO:

“I’ve got a lot of passion for digital. It really is such an incredible way to connect with consumers and really have much deeper ongoing relationships with them… Our media strategy is pretty simple: Follow the consumer. And the consumer is becoming more and more engaged in the digital world.”

It’s that last part that’s most insightful for me. Keep it simple, follow the consumer. This is very good advice, as it seems too often marketers can get so focused on the dizzying array of niche products and capabilities online that they lose sight of what they are really trying to accomplish, which is exactly that: reach consumers. Lots of them. In the right environments and with the right messages. This is something near and dear to our hearts at, because when done well it drives strong, measurable results.

The discussion of online spend ramping to the point that marketing mix models can begin routinely reading it is also an important one for 2 reasons.  First because the 5% threshold they mention for an MMM read can represent a real inflection point for online spend for the CPG category – an extremely important category for the long-term health of the online ad ecosystem.  Secondly, the discussion highlights that fact that marketers want to think of online as a medium in line with other media at their disposal.  Online media is often sold as “special” or “different”, but the path to higher spend isn’t in forcing marketers to learn and embrace new technologies and metrics.  Nor is it in driving marketers into niche strategies like BT or custom executions that are flashy, but have negligible reach and impact.  Increasing online spend will undoubtedly involve new technology and learning on both the buy-side and the sell-side, but to focus on technology for technology’s sake is to miss the point.  The path to long-term, significant, sustainable increases in digital spend will be paved in large part by helping marketers leverage the skills and tools they already have to better follow the consumer – a consumer who is becoming more and more engaged in the digital world.

P&G focuses on the long term

Really insightful article about P&G in Ad Age a few days back. Focused on investments they are making now in long-term growth *over the next decade*. A far cry from the recent fascination with instant gratification marketing that seems to have taken hold (at least in much of the press) during “this economy”.

One of the data points cited in the article was a Consumer Edge survey of 1,000 consumers, which found 19% of Tide’s core users have traded down, at least at times, to value brands during the recession. Of them, 81% said they’ll probably stick with value brands after the recession. An example of the significant, permanent share loss possible when branding investments slip – a topic we have discussed on this page previously.

Even Wall Street likes the long-term focus – a rare occurrence at that address. The article notes that “expectations that P&G will pull back on earnings and sales guidance for next year has been sending its stock *up* in recent weeks, because they signal a more aggressive posture for the long term. Were Mr. Lafley next week to reaffirm a commitment to double-digit earnings growth he’s delivered for nearly a decade, some analysts believe the short-term focus could actually disappoint investors and hurt the stock…Deutsche Bank analyst Bill Schmitz says, ‘Share losses are a slippery slope, and we believe management understands nipping it in the bud now is a lot less expensive than trying to take it back later.’”

We couldn’t agree more and while the short-term results of effective Branding are measurable, the full effect will play out over the long term. This is strategic marketing at its best and sets an example others would be wise to follow.

Cutting Spending Hurts Brands Long Term

Great article in Ad Age today.  Brands that cut spending in economic downturns lose share to private label products.  Permanently.  Some exceptionally smart marketers (P&G, L’Oreal) were identified as bucking the budget cutting trend last quarter, but the trend itself means that too many brands were pulling back on these critical ongoing investments.  When times are tough, we all must focus more than ever on getting the most impact out of every dollar of spend.  However, making cuts today that are proven to lead to permanent market share declines is exactly the sort of short-term thinking that got us into “this economy” in the first place.  At least Wall Street can blame the Fed…

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